PETROBRAS: THE WAY FORWARD€¦ · 2 FORWARD-LOOKING STATEMENTS: DISCLAIMER The presentation may...
Transcript of PETROBRAS: THE WAY FORWARD€¦ · 2 FORWARD-LOOKING STATEMENTS: DISCLAIMER The presentation may...
PETROBRAS:
THE WAY FORWARD
— October 24th, 2016
2
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about
future events within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, that are not based on historical facts and are
not assurances of future results. Such forward-looking statements
merely reflect the Company’s current views and estimates of future
economic circumstances, industry conditions, company performance
and financial results. Such terms as "anticipate", "believe", "expect",
"forecast", "intend", "plan", "project", "seek", "should", along with
similar or analogous expressions, are used to identify such forward-
looking statements. Readers are cautioned that these statements are
only projections and may differ materially from actual future results
or events. Readers are referred to the documents filed by the
Company with the SEC, specifically the Company’s most recent
Annual Report on Form 20-F, which identify important risk factors
that could cause actual results to differ from those contained in the
forward-looking statements, including, among other things, risks
relating to general economic and business conditions, including crude
oil and other commodity prices, refining margins and prevailing
exchange rates, uncertainties inherent in making estimates of our oil
and gas reserves including recently discovered oil and gas reserves,
international and Brazilian political, economic and social
developments, receipt of governmental approvals and licenses and
our ability to obtain financing.
Disclaimer
— We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information or future
events or for any other reason. Figures for 2016 on are estimates or
targets.
All forward-looking statements are expressly qualified in their
entirety by this cautionary statement, and you should not place
reliance on any forward-looking statement contained in this
presentation.
In addition, this presentation also contains certain financial
measures that are not recognized under Brazilian GAAP or IFRS.
These measures do not have standardized meanings and may not be
comparable to similarly-titled measures provided by other
companies. We are providing these measures because we use them
as a measure of company performance; they should not be
considered in isolation or as a substitute for other financial
measures that have been disclosed in accordance with Brazilian
GAAP or IFRS.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, such as oil and gas
resources, that we are not permitted to present in documents filed
with the United States Securities and Exchange Commission (SEC)
under new Subpart 1200 to Regulation S-K because such terms do not
qualify as proved, probable or possible reserves under Rule 4-10(a)
of Regulation S-X.
WHERE WE ARE
WHERE WE WANT TO BE
HOW WE WILL GET THERE
MANAGEMENT SYSTEM
LONG TERM STRATEGIC DRIVERS
3
WHERE WE ARE
—
4
Where we are
—
Uncertainties in global economy
Oil industry
Changes in the competitive scenario: shale oil/gas
Portfolio optimization and adjustments to the workforce
Petrobras’ Context
Lava-Jato operation
Challenging regulatory framework and judicial disputes
High-cost high debt levels
Business environment in Brazil
5
Excess supply pushes oil prices down
—
Supply and demand balance
(kbpd)
Source: U.S. Energy Information Administration
Average deficit:
0.1 kbpd
6
Brent Price Trend (2005 – 2016) (US$/bbl)
Source: Bloomberg. Data as of 10/21/2016
2012 2013 2014 2015
1,4
0,6
-0,8 -0,9 -0,6
0,1
-0,5
-0,9
0,3
0,6 0,4
1,9 1,6
1,8
1,2
2,3
1,3
0,2 0,4
3Q 2016
Average surplus:
1.4 kbpd
20
40
60
80
100
120
140
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
5
10
15
20
25
30
35
2006 2015 1H16
21
11
Petrobras: financial situation
—
Operating cash generation Gross debt
0
1
2
3
4
5
6
2006 2015 2Q16
0.4
5.3
4.5
Net Debt / EBITDA
7
21
132
124
Growing Debt relative to Cash Generation
(US$ billion)
8
Attraction of private
investments
Expectation of a more dynamic and competitive business environment
—
1997
End of
Petrobras’
monopoly
2008 2006
Pre-salt
discovery
Discussion of new
pre-salt regulatory
framework
Interruption of bid
rounds
2016
Changes in the pre-salt
regulatory framework
Partnerships and divestments
by Petrobras
Improvement in local content
policy
Economic stability
Regulatory stability
Regularity of bid rounds
Market opening:
competitive
environment
1999
Partnerships
with Petrobras
10 bid rounds with the participation of several companies
1998 2013
Resumption of
bid rounds
Start of bid
rounds
WHERE WE WANT TO BE
—
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An integrated energy company
focused on oil and gas that
evolves with society, creating
high value, with a unique
technical capability
OUR VISION
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OUR VALUES
Ethics and
transparency
Market
driven Results
oriented
Overcoming
and confidence
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Respect for life,
people and
environment
Main Metrics of Strategic Plan (SP) and Business and Management Plan (BMP)
—
SAFETY FINANCIAL
Reduction of
36% In the Total Recordable Injury
Frequency Rate (TRIFR*)
Reduction in
LEVERAGE Net Debt/EBITDA
* TRIFR = number of reportable injuries per million man-hours
TO
2.5
in 2018
FROM
5.3 in 2015
TO
1.4
in 2018
FROM
2.2 in 2015
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HOW WE WILL GET THERE
—
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Highlights of the Plan
—
main metrics drive the strategy
Unified Plan
New management system with targets cascaded down
to supervisory level
Disciplined execution: systematic monitoring of goals with mid-course corrections
New tools of cost management
Meritocracy
2 (SP and BMP)
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Engagement of the leadership
SAME FOCUS ON GOALS AND RISC MITIGATION
EVOLUTION
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Gasoline and diesel prices: aligned with market
—
Import parity
Tax
Margin and risk
IP
Volatility in foreign exchange, oil and oil products prices,
delays and others
CIDE, PIS and COFINS, ICMS
Price at the refinery
16
Investment spending by Petrobras (Capex)
—
17
2017 Capex
US$ 19.2 Billion
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
90,00
100,00
PNG 2015-2019
(revisão JAN 2016)
PNG 2017-2021
81%
82%
17%
17%
2%
1%
Comparison of total capex
(US$ Billion)
Exploration & Production (E&P) Other segments Refining & Natural Gas (RNG)
98.4
74.1
-25%
2015-2019 BMP (Jan 2016 review)
2017-2021 BMP
Cost reductions
—
142
126
2015-2019
BMP 2017-2021
Estimates
2017-2021
BMP
-18%
53% 37%
10%
E&P RGN Demais áreas
Manageable operating costs*
(US$ Billion)
18
153
* Manageable operating costs: lifting, refining, logistics and distribution costs, overhead and others
Refining & Natural Gas (RNG) E&P
Partnerships and divestments
—
2015-2016 2017-2018
19.5
15.1
Amount in US$ Billion
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Benefits of the partnerships
Risk sharing
Capex reduction
Increased capacity to invest along the value chain
Technological exchange
Strengthening of corporate governance
The partnerships and divestments program of
Petrobras leverages third parties investments
that might surpass US$ 40 Billion* in the next
10 years.
* Does not consider investment of suppliers to increase capacity
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0
1
2
3
4
2017 2021
Produção Óleo, LGN e Gás
Oil+ NGL Brazil
Oil + gas International
2.52
3.34
2.07
2.77
Natural gas Brazil
2.62
3.41
Production profile
—
Oil , NGL* and Gas production
(million boed)
* Natural Gas Liquids
Main risks*
—
Material changes to market conditions
Divestments and partnerships below plan
Judicial disputes
Renegotiation of the Transfer of Rights terms
Impact of Local Content on costs and timing of the projects
Delays in the construction of platforms
Higher than expected capex
*These risks are not exhaustive
Risks and mitigating activities
managed by accountable
people
MANAGEMENT
SYSTEM
—
Defined Strategic Plan and
top BMP targets...
Next steps of the
management system
… supported by specific
initiatives
Define action plans for the
initiatives
Detail targets – Scorecards
Application of Zero Base
Budgeting (ZBB) methodology
Actively manage risks
Define monitoring governance
and tools
Culture change
✓ ✓
Next steps: it is all about execution
—
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EVOLUTION
add value which can be stopped?
Is each area
Are there activities that do not
Is it possible to do deliver targets
Is there a simpler way to work without
compromising safety and quality?
Threshold (Most important)
High priority expenses
Medium priority expenses
Low priority expenses
EXPENSES TOWER
Application of Zero Base Budgeting (ZBB) methodology
—
focused on its core activities?
more efficiently?
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Petrobras is preparing a culture change plan in three phases
—
Transformation
culture 1
Prosperity
culture 2
Continuity
culture 3
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2016/2017
2017/2018
2018/2019
Based on a high performance culture, with tangible results, which will prioritize people
safety, ethics, simplicity, transparency and trust
Petrobras is implementing a program to reduce bureaucracy
—
ASSUMPTIONS
Simplicity for
productivity
Trust with consequence
GOALS
Agile decisions without
compromising safety and
compliance
Simplification of internal
processes leading to a
reduction of times and cost
DRIVERS
Excessive number of
standards and reports
To foster mutual trust
Slow and complex decision
processes
Impact to productivity at
both corporate and
operational areas
STRUCTURE
Program led by the Chief
Strategy and Performance
Officer
Managing group responsible
for program coordination
Executive group formed by
project teams, with
representatives from
involved areas
Initial focus on decision
processes, management
reports, standards and
control systems
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LONG TERM
STRATEGIC DRIVERS
—
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We will continue to strengthen our company to become a
reference in ethics, governance, process integrity, safety
and productivity
Our company will be guided by business principles in
compliance with its social objectives
We will move ahead with a prudent and sustainable
approach, maintaining a long-term view on financial,
environmental and social aspects
We will be one of the best companies to work for, with
meritocracy as the key pillar for recognizing our employees’
development
We will consider opportunities to increase our international
presence, taking advantage of the learnings of the past
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We will seek alternative higher value added uses for oil,
including the integration between the refining and
petrochemical areas
We will continue to be at the forefront in deep water
technological development and knowledge
We will expand our expertise in renewable energy,
seeking competitiveness in the medium and long term
We will pursue a relevant share in the market of gas as a
transition energy to a low carbon society
We will continue to be Brazil's largest integrated energy
company focused on oil and gas and with a growing
presence in alternative energy
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